"A Lottery is Taxation, Upon all the Fools in Creation; And Heav'n be prais'd, It is easily rais'd, Credulity's always in Fashion; For, Folly's a Fund, Will never lose Ground; While Fools are so rife in the Nation."
(Henry Fielding 1732; cited in Clotfelter and Cook 1989, 215)
"Peasants are like sesame seeds: the harder you squeeze, the more they render" (Feudal Japanese maxim).
"Under the Darwinian norm it must be held that men's reasoning is largely controlled by other than logical, intellectual forces" (Veblen 1919, 441)
Imagine a gathering of rich folks, unburdened by moral scruples, dedicated to devising a scheme for transferring yet more of society's wealth from the least privileged to themselves, with, no less, the eager participation of the losers. What might they dream up?
How about state lotteries? What makes state lotteries so perfect for accomplishing this end is that the poor have limited recreation options; they have little means or potential for escaping their status; state lotteries can be promoted as generating revenues to be spent on public goods that benefit the less well-off; they are monopolies that can command monopoly returns; and the product offered by lotteries is an inferior good taxed at an exorbitant rate.
This paper surveys the political economy of this beguiling recreational means to distribute income from the have-nots to the haves. As will be seen, it is an ideal instrument for a kleptocratic plutocracy. State lotteries .are not, of course, a consciously formulated conspiracy of the rich to fleece the poor. However, the consequence is conveniently the same. It just happens that way.
A Brief Historical Backdrop
Gambling has existed throughout human history. (1) Today, some form of legalized gambling exists in about 140 countries, and lotteries exist in 100 of these (Clotfelter and Cook 1989, 21). Gambling provides excitement, it is an adventure. Most gambling activity throughout history has likely been a zero-sum game among acquaintances with all money played fully distributed among participants. However, the temptation was always there for someone to organize a game from which the organizer would profit at others' expense. However, if entry were free, such that anyone could organize a gambling scheme, competition might be expected to act as a curb on such profits.
During certain periods, traditional cultural values, especially religious ones provided a degree of protection for the poor against the establishment of lotteries, (2) although the Catholic Church in Europe made use of the lottery itself from time to time, and local churches in America often used lotteries to raise capital or to fund poverty relief efforts. Indeed, during the eighteenth and nineteenth centuries, lotteries were fairly common in the American colonies and then republic. These lotteries were typically local, organized by towns, churches, or schools to gain revenues for local capital projects and ended with the completion of the projects they funded.
By the mid-nineteenth century, a number of state-franchised private lotteries became embroiled in scandals. Social reformers began to campaign against lotteries, and gambling in general, on the grounds they bred criminality, exploited the poor, and corrupted moral values. The majority of states adopted constitutional prohibitions on lotteries, (3) and lotteries of any substantial size disappeared from the American landscape, (4) especially after Congress banned all lottery materials from interstate commerce in 1890 and prohibited all mail related to lotteries in 1895.
Beginning in the mid-1960s, after a 70-year prohibition, state lotteries began returning in force. (5) Financially-pinched states, always on the lookout for new sources of revenue and unwilling to raise taxes, can easily camouflage the fact that state lotteries are in essence just another excise tax. Further, traditional religious objections to lotteries had weakened. Nevertheless, most governors and legislators were still reluctant to pass the necessary legislation to create such lotteries, and most came into being via referendum. (6)
Given the long tradition of opposition, it is somewhat ironic that lottery gambling would return as state enterprises. The overt reason was that gambling's illegality had forced it into an underground of criminality. (7) Since evidence suggested people would gamble regardless of its legality, why not have the benefits accrue to the people through their state rather than be channeled into the realm of criminality? The state, it was argued, could better insure the games would be kept honest.
However, the most powerful argument was that by funneling these gambling monies to the state, more services could be provided to benefit society's least privileged. This built upon the long tradition of socially acceptable small-scale local gambling, usually in the form of bingo games or raffles run by fire departments or churches. The returns were always portrayed as benefiting the community generally, if not especially the least well-off. State lotteries have generally used the same sort of ploy, pretending that the receipts are to be used for good social causes, most frequently education. This is itself a shell game. (8) Nothing prevents state funds previously earmarked for education from being reduced by the amount made available from lotteries. Indeed, in some instances as lottery revenues rose, total state spending on education actually fell (Strahahan and Borg 1998, 81-82); and the earmarked funds have not always been used for the intended purposes (Hansen 2004, 2), although there can be no way of knowing how much would have been spent on the intended services in the absence of lottery revenues.
In any event, the arguments in favor of state lotteries appear to have been persuasive. (9) Since 1964, 40 states and the District of Columbia have adopted state lotteries. (10) In any given year, about one-half of Americans play lotteries, making them the most popular form of gambling. Total spending on lotteries in 2003 was almost $45 billion, or over $155 per capita--more than was spent on all reading materials or movie attendance. States with lotteries received, on average, 2.26 percent of the total self-generated revenue from their lottery operations. (11) Total lottery expenditures amount to about 0.5 percent of national income (Hansen 2004, 1, 5, 17). The amount spent on state lotteries has been growing more rapidly than that spent on other forms of gambling, increasing at an annual growth rate of 11.3 percent between 1990 and 1998 (Mikesell 2001, 87).
However, the latent reason for state lotteries is that they stealthily reallocate income from the relatively poor to the relatively rich. The intricacies of how this occurs are addressed below.
Gambling: Consumption or Investment?
Gambling is a form of recreation, and thus a form of consumption. Not unexpectedly, mainstream economists tend to view playing the lottery as merely consumption, and their adherence to the doctrine of consumer sovereignty requires that it be viewed as not essentially different from other forms of consumption. As Charles Clotfelter has put it:
"Most people who play lottery games do not win, but that does not make the activity of playing any more 'wasteful' or irrational than, say, playing video games, eating candy bars, or attending a hockey game. They play because they evidently get something out of it ... economists are inclined to look at people's own behavior and assume that those who play the most will get the most enjoyment out of it" (1999, 4).
As a form of consumption, gambling is what economists call an inferior good. That is, people spend a declining percentage of their income on gambling as their income increases. Gambling is a more important form of recreation for the poor than for the better off. This is not surprising insofar as the recreational possibilities for the poor are far more restricted.
The view of gambling as consumption is not incorrect. Indeed, gambling is probably almost entirely a form of consumption for the well-off. However, this view is incomplete. Although gambling is a form of consumption for the poor, as well as for the rich, for the former it is often, if not usually also a form of investment, albeit a terribly foolish one. Gambling, especially where the stakes are extremely high as with state lotteries, offers the promise of an escape from relative privation, in this sense, then, gambling is an investment in a hoped for better future.
There are three reasons why the less-well off may be especially vulnerable to the promise of getting rich by "investing" in gambling. Because of poor and generally uneducated parents, limited contact with better-educated people, and poor quality schools, they develop relatively little human capital. They are not well prepared to find high paying jobs and they lack access to credit to launch entrepreneurial ventures (the main vent for their entrepreneurial talents being illegal activities such as dealing drugs).
Second, those same conditions are likely to inculcate higher discount rates, making them more-present oriented. They grow up in a subculture preoccupied with getting along in the present or very near term, their culture imbuing them with little confidence that hard work and saving will pay off (Callois 1962). The greater extent of violence, especially murder, in their environments fosters doubt as to whether there will be a future. Indeed, on average, their expected life spans are shorter. Not surprisingly, many state lotteries have devised a strategy specifically to exploit this truncated time horizon--the play and scratch tickets that reveal immediately if a player is a winner. No need to wait whatsoever. Instant gratification. To keep gamblers interested, new scratch-off themes modeled on football, basketball, baseball, poker, the Olympics, etc., are constantly introduced. Not surprisingly, of all lottery games, instant games bring in the most revenue, 47 percent of the total (Hansen 2004, 16).
A third condition rendering the less well-off more vulnerable to the siren call of lotteries is that they possess relatively little control over their everyday lives. If they work, they are likely bossed about. Because they possess little financial means, they have limited free-time activities. Crime, inadequate public services, and dysfunctional families create an ambiance that seems "out-of-control." Illegal numbers games have long exploited this vulnerability. Gamblers choose their "lucky" numbers, providing them with a sense of participation (Zola 1964). A win suggests skill. Choosing a number provides an illusion of control. Eager to capture this market, state lotteries have adopted the same techniques.
Much of what the wealthy do for recreation can have a degree of economic payoff. That is, some of their consumption of recreation also serves as investment, as when their recreational pursuits provide a medium for making contacts that in some way might enhance their job advancement. Or, such activities might help them develop more finely-honed social skills. Golf, a form of recreation most often engaged in by the economically well-off, is frequently an ambulatory business discussion. Business knowledge is shared, contacts are deepened, and networks expanded. Tennis, racquetball, and other country club activities provide similar career benefits. Even bridge and reading make participants mentally sharper, with consequences for their business lives.
Although the less well-off may also derive career-enhancing spillovers from recreational activities, such benefits are likely far more modest. The one recreational activity that most strikingly promises advancement--perhaps beyond the need even to hold a job--is the state lottery.
Evidence that gambling is more than mere consumption is provided by the fact that it has been found to thrive on economic hardship and despair (Dickerson 1984, 22; Mikesell 1994). The fact it is disproportionately played by the least well-off already makes this clear. It was also markedly evident during the Great Depression. During that decade of extreme hardship, gambling increased significantly. Some states legalized bingo and pari-mutuel betting. Illegal forms of gambling such as numbers games thrived, and sundry other forms of scams such as chain letters and ponzi schemes were omnipresent.
A Regressive Tax
Revenues from lotteries are effectively taxes. As Charles Clotfelter and Philip Cook put it, they "are no less useful than revenues that are labeled taxes, so it is altogether appropriate to label them implicit taxes" (1989, 216). Proponents of lotteries contend that the profits states realize from lotteries should not be considered taxes because playing the lottery is voluntary. However, this could be said of all sales taxes on consumption goods, excepting necessities since their purchase is equally voluntary.
As noted earlier, people spend a declining percentage of their incomes on lotteries as their incomes go up. For instance, in 1992, families with annual incomes of less than $15,000 spent 4.21 percent of their weekly income on lotteries, whereas families with annual incomes over $50,000 spent 0.94 percent (Pirog-Good and Mikesell 1995, 454). Even in absolute terms, households with incomes under $10,000 spend almost three times as much as those with incomes above $50,000 (Hansen 2004, 2). Lotteries are clearly what economists call "inferior goods."
The national average for state lottery excise taxes is 38 percent ((Strahahan and Borg 1998, 79). Why do states choose an inferior good to tax so heavily? Ever in need of revenue, state governments have choices as to what to tax. In principle, they could choose goods with very high income-elasticities at high-income levels, such as luxury cars, vacation homes, capping of the mortgage deduction, private planes, expensive jewelry, or yachts.
Clearly, state lotteries violate the principle of vertical equity. Although this principle has differing interpretations, the most common is the "ability to pay" argument made over 200 years ago by the widely recognized father of modern economics, Adam Smith: "[t]he subjects of every state ought to contribute toward the support of the government ... in proportion to the revenue which they respectively enjoy under the protection of the state" (1776, 777).
Violation of Horizontal Equity
In 1959, Richard Musgrave defined horizontal equity as the principle that "people in equal positions should be treated equally" (160). High taxation of a good disproportionately consumed by a specific group of people would, Musgrave argued, constitute "capricious discrimination."
Strahahan and Borg have found that "Caucasians pay significantly less lottery tax than African Americans with identical characteristics other than race" (1998, 79). Whereas Caucasians on average pay $47.12 in lottery taxes per year, African Americans pay an average of $96.10 per year. Hispanics and other ethnicities also pay more than Caucasians, although by a lesser margin (1998, 79). These minorities are disproportionately among the least well-off in American society. That they disproportionately play the lottery suggests that for them, such activity might in some part be an investment.
Not surprisingly, those with the least education also pay higher lottery taxes. (12) These taxes are significantly higher for individuals with less than a high school education but are identical in other characteristics to those paying less (Strahahan and Borg 1998, 80). Also not surprising is that older individuals, given their expected higher rate of discount, pay a slightly higher lottery tax.
Like the producers of commodities, state lotteries generally target their marketing to their most likely clientele. In this case, it is society's less well-off (Clotfelter 1999, 3). (13) However, accentuating horizontal inequity, African Americans are especially targeted.
The principle of horizontal equity requires the equal treatment of equals. Not only does the lottery tax violate this principle, it does so in a manner that runs counter to a major national struggle to overcome the legacy of racial discrimination. Ironically, this tax has been implemented precisely during the period since this commitment began in earnest.
A State Monopoly
Between the inception of state lotteries in 1964 until 2002, lotteries paid out 53 percent of revenues (far lower than other forms of gambling), (14) and 35 percent went into state coffers. Twelve percent went to retailers and covered administrative costs (Hansen 2004, 14). Thus, states make a very high profit rate on their lotteries. This represents a very high "implicit tax" on lottery ticket purchases. This tax on lotteries is higher than on any other form of gambling.
States do not permit private enterprise to enter the lottery market. Thus, the extraordinary profit rate (or tax) cannot be competed away; although competition from other state lotteries has some impact on bidding for customers, it does not seem to compete down the profit rate. As with private sector monopolies, there is also little pressure to hold down costs. (15)
Why then do states insist on maintaining their lotteries as monopolies? They cannot defend an argument that it is to maintain a high "sin" tax to discourage gambling, since they spend so much advertising to coax people to buy more of the good. It must be to maximize revenues from the consumers of lottery tickets, and since these customers are widely known to come disproportionately from the lower classes, and even more so from minorities, the reason whether overtly embraced or not, must be to redistribute income from those groups to the more affluent.
Fueling the Ideology of Equal Opportunity
Ironically, at the same time state lotteries fleece the least well-off, they feed into the ideology of the United States as the land of equality and opportunity. Anyone can get rich. Anyone can buy a ticket and have a go at the American Dream. (16) This is of course, the same ideology that underlies Wall Street's bogus egalitarian claims. (17)
The least well-off tend to have the worst jobs (or no jobs at all). Not only do their jobs provide low income, they also provide relatively little intrinsic return. Their jobs are generally the dirtiest, most dangerous, and most repetitive. There is generally little opportunity for participation in decision-making. They are bossed about with almost no opportunity for creativity, self-expression, or self-development in their work. Although any job may beat no job at all, their jobs offer little certification of value. They may take pride in having a job where jobs are scarce, but their jobs provide little prestige.
Because of low incomes, there is also limited potential to certify their value through consumption. Everything they possess is notably inferior to what prevails as the norm in society: their educational attainment, their lodging, their neighborhoods, their cars, their clothes, their everything. Advertising and the popular media keep them ever aware of their low status.
The least well-off possess few sources for social esteem, for social certification of value. Lotteries to the rescue!! One lucky ticket and you can be instantly catapulted to enormous wealth and social standing. Lottery advertising continually hammers this home. Clotfelter and Cook point to a before-and-after ad run in Washington, D.C. where the
"'before' picture shows a bedraggled man, face covered with stubble, hair matted down, wearing glasses and sloppy clothes. In the 'after' picture he is clean shaven, well groomed, wearing a tuxedo but no glasses, conspicuously holding a copy of a theater program. The ad proclaims, 'Just One Ticket ... and It Could Happen To You'" (1989, 207).
An Illinois advertisement in an impoverished Chicago neighborhood states: "This could be your ticket out." Another billboard in the 1980s read: "How to get from Washington Boulevard [located in an extremely depressed west Chicago neighborhood] to Easy Street" (Goodman 1991, 59). "His [Martin Luther King, Jr.'s] dream lives on... honor the dream--D.C. Lottery," read an ad in Washington, D.C. Finally, in Massachusetts: "Work is nothing but heart-attack-inducing drudgery" (Heberling 2002, 599).
Lacking ready resources and contacts for entrepreneurial undertakings, excepting perhaps in crime, the less well-off who possess entrepreneurial proclivities are ready targets for ads such as one in California depicting a father-son business as a possible consequence of winning (Clotfelter and Cook 1989, 208).
Lotteries are very aggressively advertised. (18) On average, lottery tickets sales generate a 5.5 percent commission for vendors, giving them an incentive to advertise the product. The greatest part of promotion is done by advertising agencies that are commissioned by states to promote their lotteries--such advertising is transmitted via all media: television, radio, newspapers, magazines, and the Internet. (19) There are even televised lottery game shows. (20)
Such promotion fails the test of truth-in-advertising. Indeed, because lotteries are state-sponsored, they are not forced to conform to the Federal Trade Commission's truth-in-advertising standards that regulate private sector businesses. Rarely is the chance of winning or payout percentage mentioned, nor are consumers informed of the rate at which this form of consumption is taxed. State lotteries grossly fail the test of transparency in public policy.
The extent to which lotteries are advertised and the extent to which such advertising is targeted at the least well-off raises the question as to whether lottery players would be so readily fleeced if not continually persuaded to gamble by their state governments. Clotfelter and Cook point out that "lilt has now become conventional wisdom that a lottery must market aggressively to be a 'success'" (1989, 212). (21)
Just Part of a Bigger Picture
Since the early 1970s, inequality has become much greater in the United States. The poorest 20 percent of Americans saw their share of total income decline from 5.4 percent in 1970 to 3.4 percent in 2003. Over the same period, the second poorest 20 percent saw their share of total income drop from 12.2 to 8.7 percent, and for the middle 20 percent their total income declined from 17.6 to 14.8. Meanwhile, the share of the richest 20 percent rose from 40.9 to 49.8 percent. Most strikingly, the richest five percent saw their share climb from 15.6 to 21.4 percent (Mishel, Bernstein and Allegretto 2004). Inequality in wealth ownership is far greater, and this inequality has greatly increased, as Edward Wolff of New York University demonstrated in his book Top Heavy (1995). The fact that Bill Gates owns more wealth than the bottom 45 percent of the population is a revealing example of the extreme inequality in wealth ownership
Causes other than public policy have fueled this dramatic increase in inequality, most notably globalization and new technologies. Government could have acted to counter or at least soften these forces--instead, public policy has greatly reinforced them. This has been done primarily through tax cuts favoring the rich and cuts in public services and social welfare programs that benefit the less well-off.
The explosion of state lotteries fits into the broad public policies that have nurtured this orgy of the rich. Indeed, it is an integral part of it. States turned to lotteries as a source of revenues in part because of excessive tax cuts that disproportionately benefited the wealthy. In fact, the Republican Party seems to have had this fiendishly in mind in 1956 when their election platform advocated tax cuts financed by the creation of a national lottery (Ezell 1960, 277). (22)
Gambling and Freedom
It would be as futile and socially destructive to outlaw gambling as it has been to outlaw other victimless crimes such as the use of narcotics and prostitution. To repress such activities fully would require a police state. To attempt to suppress such activities in a society that strives to be free merely generates big-league crime and other unintended consequences such as drug overdoses and sexually transmitted diseases.
The limits of freedom set forth by John Stuart Mill (1863) remain attractive and convincing: Individuals should be free to partake in any activities that do not harm or restrict the freedom of others. Mill was giving clear enunciation to a doctrine of freedom that developed during the French and Scottish Enlightenments. This same doctrine evolved with and informed classical political economy in a manner that served to legitimate capitalist institutions. Markets came to be seen as perfect social mechanisms for enabling freedom. Buyer and seller must freely give assent for an exchange to occur.
However, as Karl Marx poignantly demonstrated, under the capitalism of the period, the doctrine served as legitimating ideology for a capitalist monopoly on wealth and power. Workers were free in a dual sense: they were free from feudal fetters and thus able to sell their labor power to the employer of their free choice; and, they were free from any ownership or claim upon the means of production. The capitalist class had monopoly ownership of the means of production, so this second sense of freedom meant that to survive workers had to locate members of this class willing to purchase their labor power. Competition among capitalists, however, meant that the wage and working conditions would everywhere be the same. Consequently, the freedom of the worker was reduced to working for the capitalist class at barely subsistence wages (held down by a reserve army of the unemployed, ever replenished by laborsaving technological change) or starving. Marx exposed the formal freedom of the Enlightenment as illusory under early capitalism--a mere intellectual instrument for legitimating capitalist institutions.
State lotteries might be viewed as being constructed on the same ideology. Everyone is free to play the lottery or not. Yet those who play are disproportionately those who have the fewest options for making something of themselves. The state holds out and aggressively promotes to these least fortunate the prospect of "making it" by playing its gambling game and then taxes this "free" choice to play at a rate almost ten times the average rate it taxes other "consumption" goods. It maintains a pretense that the revenues will especially benefit the poor while enabling the state to cut taxes for the financially better off. State lotteries make a mockery of the freedom (23) they pretend to celebrate, and lend support to Marx's characterization of the state as the executive committee of the ruling class. (24)
Callois, Roger. Man, Play, and Games. New York: Free Press, 1962.
Clotfelter, Charles T. and Philip Cook. Selling Hope: State Lotteries in America. Cambridge: Harvard University Press, 1989.
Clotfelter, Charles T. "Do Lotteries Hurt the Poor? Well, Yes and No." A Summary of Testimony Given to the House Select Committee on a State Lottery, April 19, 1999.
Clotfelter, C. T., P.J. Cook, J.A. Edell, and M. Moore. State Lotteries at the Turn of the Century: Report to the National Gambling Impact Study Commission. Durham, NC: Duke University Press, 1999. Concerned Women for America. "Commission Call for a Halt to Gambling Expansion" (http://www.cwfa.org/printerfriendly.asp?id=1052&department=cwa& categoryid=family), 1999.
Dickerson, Mark G. Compulsive Gamblers. New York: Longman, 1984.
Ezell, J. S. Fortune's Merry Wheel: the Lottery in America. Cambridge: Harvard University Press, 1960.
Fielding, Henry. The Lottery. London: J. Watts, 1732, Scene 1.
Goodman, Robert. 1991. "The Lottery Mystique: Why Work at All?" Newsday (June 28, 1991): 59.
GTech Corporation. "The Vital Signs of Legalized Gaming in America: GTech's 8th Annual National Gaming Survey," 2000.
Hansen, Alicia. "Lotteries and State Fiscal Policy." Tax Foundation Background Paper 46, October, 2004.
Heberling, Michael. "State Lotteries: Advocating a Social III for a Social Good." The Independent Review VI, 4 (Spring 2002): 598-604.
Mikesell, John L. "Lotteries in State Revenue Systems: Gauging a Popular Revenue Source after 35 Years." State and Local Government Review 33, 2 (Spring 2001): 86-100.
--. "State Lottery Sales and Economic Activity." National Tax Journal XLVII (March 1994): 165-71.
Mill, John. On Liberty. Boston: Ticknor and Fields, 1863.
Mishel, Lawrence, Jared Bernstein and Sylvia Allegretto. The State of Working America. Ithaca, N. Y.: Cornell University Press, 2004.
Musgrave, Richard. The Theory of Public Finance; A Study In Public Economy. New York: McGraw-Hill, 1959.
Pirog-Good, Maureen, and John L. Mikesell. "Longitudinal Evidence of the Changing Socio-Economic Profile of a State Lottery Market." Policy Studies Journal 23, 3 (1995).
Smith, Adam. The Wealth of Nations. New York: Modern Library,  1937.
Strahahan, Harriet, and Mary O'Malley Borg. "Horizontal Equity Implications of the Lottery Tax." National Tax Journal 51, 1 (March 1998): 71-82.
Veblen, Thorstein. The Place of Science in Modern Civilization. New York: B.W. Huebsch, 1919.
Welsh, James. "Why do People Play the Lottery?" Consumers' Research Magazine 79 (1996): 22-25.
Wolff, Edward. Top Heavy: A Study of Increasing Inequality of Wealth in America. New York: Twentieth Century Fund Press, 1995.
Zola, I.K. "Observations on Gambling in a Lower-Class Setting." In The Other Side: Perspectives on Deviance, edited by Howard Becker. New York: Free Press, 1964.
(1.) References to the casting of lots are found ill Egyptian hieroglyphs and the Bible. In 100 B.C., during the Hun Dynasty, China created keno to help defray the expenses of building the Great Wall of China.
(2.) Religion still provides this protection in pre-dominantly Moslem countries.
(3.) By the end of the nineteenth century, 36 states had adopted constitutional bans on lotteries (Ezell 1960, 239).
(4.) It is notable that many business people joined reformers in opposing lotteries. They claimed monies spent on lotteries diverted funds that would otherwise be spent on their more wholesome goods and services.
(5.) It is not surprising that once launched in one state, other states would follow suit. New Hampshire introduced its lottery in 1964 and in its first year, out-of-state residents purchased 80 percent of the tickets. Understandably, neighboring states would prefer to capture these revenues for themselves (Hansen 2004, 7).
(6.) New Hampshire's lottery was introduced over the strident objections of those who labeled it a "sin tax." Lacking both a state sales and income tax, New Hampshire was strapped for revenues.
(7.) It has been suggested, however, that advertising carried out by state lotteries may in fact have increased rather than decreased participation in illegal gambling by increasing awareness of the potential for gambling (Hansen 2004, 31).
(8.) And apparently, a very successful one. A 2000 survey found that 65 percent of those polled would more likely participate in a lottery if resulting state revenues were earmarked for a specific purpose, such as education (Gtech Corporation 2000, 10; cited in Hansen 2004, 19).
(9.) Not surprisingly, intense lobbying was carried out by private suppliers of lottery equipment, who also initiated petition drives where state legislators remained resistant to instituting state lotteries (Hansen 2004, 7).
(10.) The years in which states adopted lotteries: New Hampshire, 1963; New York, 1967; Connecticut, Massachusetts, Michigan, Pennsylvania, 1972; Maryland, 1973; Illinois, Maine, 1974; Vermont, 1978; Arizona, 1981; Washington, 1982; Colorado, 1983; California, Iowa, Missouri, Oregon, West Virginia, 1985; Florida, 1986; Kansas, Montana, South Dakota, Virginia, Wisconsin, 1988; Idaho, Indiana, Kentucky, Minnesota, 1989; Georgia, Louisiana, Texas, 1990; Nebraska, 1993; New Mexico, 1995; South Carolina, 2002; Tennessee, 2004 (Hansen 2004, 6).
(11.) The range in 2003 was between a high of 7.10 percent in South Dakota to a low of 0.33 percent in Montana (Hansen 2004, 17).
(12.) College graduates have the lowest per capita spending on lotteries, those lacking a high school education, the highest (Clotfelter, et al. 1999, 13).
(13.) It has been found that lottery promotions are beefed up near the beginning of the month when welfare recipients receive their welfare and social security checks (Concerned Women for America 1999).
(14.) For instance, for an informed player, about 98 percent for blackjack, baccarat and craps (Welsh 1996, 24).
(15.) John L. Mikesell, professor of public finance at Indiana University, finds that "[n]o matter how administrative costs are measured, it is more expensive to administer state lotteries than traditional (i.e., tax) sources. Furthermore, lotteries are becoming more expensive, not less expensive, revenue tools" (2001, 96).
(16.) Clotfelter and Cook note "a television commercial for an instant game called The Good Life [that] touts the advantages of wealth with images of an elegantly dressed couple dancing, a woman walking expensive dogs, a red carpet being unrolled, and a couple on a yacht. A Michigan ad puts it simply: 'The rich. Join them'" (1989, 207-08).
(17.) The claim that stock markets represent economic democracy, that anyone, even the most humble, can make a killing on Wall Street, is belied by all evidence. The beneficiaries of stock markets have always come disproportionately from among the wealthiest, even during the extraordinary bull markets of the 1920s and 1990s when more "ordinary" folks were drawn in. Indeed, because they are often "suckered" into the market when it approaches a boom's end, they are far likelier than the wealthy to be harmed, not enriched, by the market.
(18.) Prior to 1975, Federal law prohibited lottery advertising.
(19.) Evidence suggests that advertising pays off. One study finds that "[i]ndividuals who played the lottery and who saw lottery advertising on television or in stores tended to spend more on lottery tickets than lottery players who were not aware of the lottery television or store ads" (Stranahan and Borg 1998, 79).
(20.) Opportunities for playing lotteries are increasingly everywhere. Lottery tickets are becoming available at vending machines and on the Internet where they may be purchased with credit cards.
(21.) The first two state lotteries, New Hampshire and New York, were not initially financially successful (Hansen 2004, 7).
(22.) Not unexpectedly, "states with lotteries are less likely to have balanced budget amendments, Democratic governors or a high percentage of Democratic assemblymen" (Hansen 2004, 9).
(23.) If the well-off own the means of communication and disproportionately control the states that aggressively strive to persuade the less well-off to be suckered into an outrageously exploitative tax scheme, just how free can the latter reasonably be considered to be?
(24.) The "sin" tax on cigarettes--another highly regressive tax--also conforms to Marx's claim, although the requirement that they carry warning labels runs counter to the interests of the tobacco industry. At the least, gambling should carry a comparable warning: "Gambling is dangerous to your financial health."
The author is a Professor of Economics at American University, Washington, D.C. An earlier draft of this essay was presented at the Annual Meeting of the Association for Institutional Thought, Albuquerque, NM, April 13-16, 2005.…